How to spot Open Banking (and all the times you’ve already used it without realising)

Not sure what Open Banking is? Surprise: you’re probably already using it.

Open Banking’s a lot more straightforward than it might appear at first glance – and there’s a better-than-good chance that you’ve even already used it without realising.

We’re here to cut through the jargon and get to the bottom of what Open Banking is for, when you might have used it and how to identify it in the wild.

What’s so great about Open Banking?

Open Banking allows authorised and regulated providers to directly access customers’ bank accounts (with their consent, of course). It can be used to share data or make payments.

Since it enables instant and direct account-to-account payments, the customer can enjoy a seamless and user-friendly experience by directly authenticating the payment with their bank: no need for them to scrabble around finding their card and no more boring data inputting interrupting their shopping.

And from a business point of view, Open Banking payments are faster, safer and significantly cut expenses (yay!). The cost of processing card payments can really add up, typically coming in between 1.5% and 4% for every transaction. Open Banking’s direct account-to-account payments bypass these fees, making it a much more cost-effective alternative to traditional methods.

So, when have you used Open Banking?

The answer is probably at least a few times as a consumer, even if you didn’t realise it.

As it’s such a seamless and hassle-free experience, the likelihood is you won’t even have noticed that anything different was going on – perhaps apart from vaguely registering it as an unusually easy and smooth transaction.

A growing number of businesses and public sector organisations now include Open Banking as a payment option, including energy providers, local authorities and HM Revenue and Customs.

How can you tell when you’re using Open Banking?

Sellers are unlikely to use the term ‘Open Banking’ for their transactions, because most people are probably unlikely to understand what that means.

Instead, there are a few familiar (and more descriptive phrases) you can look out for to identify this type of payment.

These include:

• Pay by Link
• Bank Pay
• Pay with Bank Transfer
• Instant Bank Transfer

Should you be concerned about using Open Banking without realising it?

No, you definitely don’t need to worry about that. Open Banking is as secure as payment methods get – whether you realise you’ve used it or not!

The consumer stays in control with Open Banking, and the merchant doesn’t receive any of your credentials or account details. On top of that, it uses banking-grade security and encryption and the whole process is regulated by the Financial Conduct Authority.

Put simply: to be allowed to use Open Banking, companies have to follow strict rules and meet stringent standards to keep your data secure. Phew!

Do you have any questions or want more information about Open Banking?

We’re advocates of keeping the market as clear and accessible as possible. For any advice or support, get in touch with our friendly experts.